UniCredit Investors Narrowly Back Incoming CEO Orcel’s $9 Million Pay

(Bloomberg) -- UniCredit SpA’s shareholders narrowly approved a proposal to pay incoming Chief Executive Officer Andrea Orcel as much as 7.5 million euros ($9 million) a year, signaling unease over a package that is set to make the Italian one of the best compensated bank chiefs in Europe.

Of investors attending UniCredit’s virtual annual meeting on Thursday, 54% approved the bank’s 2021 remuneration policy, which entails doubling the chief executive’s pay from that of predecessor Jean Pierre Mustier. 76% of shareholders approved the nomination of Orcel as CEO and Pier Carlo Padoan as chairman.

Top investor advisers had recommended that shareholders vote against the pay package. “The compensation of the new CEO raises significant concern,” Proxy firm ISS wrote to investors in March, adding that the compensation “clashes with the current global context,” recommendations from the European Central Bank and the “sobriety” of the Mustier era.

Orcel and Padoan were formally appointed to their roles by board of directors on Thursday afternoon.

“I see in UniCredit the opportunity to make a difference,” Orcel said in a statement. “This is a bank of critical importance. A truly pan-European institution, but one with its origins firmly rooted in Italy, my home country.”

Orcel is set to receive up to 2.5 million euros of fixed salary and as much as 5 million euros of variable pay. The bank also proposed that he receive the maximum bonus stipulated in his contract for 2021, without linking that to performance.

While his new pay is high, the Rome-born banker was set to receive as much as $50 million from UBS provided he stayed away from a competitor, and has already received around $20 million since leaving the Swiss bank. As UniCredit has said it won’t compensate him for the rest, the move will mean Orcel will walk away from around $30 million.

Investors including Fondazione CariVerona and Fondazione CRT, which hold 1.8% and 1.7% stakes respectively, had backed UniCredit’s proposal, arguing it was an appropriate package to attract suitable talent and in line with international standards.

Italy’s second-largest lender named Orcel in January to replace Mustier, who stepped down amid internal disagreements over strategy. Orcel inherits a leaner bank, but confronts challenges including pressure from the government to take over troubled lender Banca Monte dei Paschi di Siena SpA and doubts over the lender’s route to growth.

The executive is set to give his strategic priorities for the firm in the fall, according to an analyst briefing.

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